Health insurance comes with its own vocabulary, and understanding it can make it much easier to figure out what you may actually pay for health care. Terms like premium, deductible, copay, and coinsurance often appear side by side, but they describe different types of costs.
Here’s a straightforward explanation of four common health insurance terms and what they may mean for your health care expenses.
What Is a Health Insurance Premium?
Your premium is the amount you pay to keep your health insurance coverage active. Think of it as the cost of having the policy.
Depending on your coverage, you might pay your premium monthly, have part of it deducted from your paycheck, or receive assistance that reduces your premium.
Paying your premium does not necessarily mean your health care services are free. Your plan may still have deductibles, copays, and coinsurance.
What Is a Deductible?
A deductible is the amount you generally need to pay for covered health care services before your insurance plan begins paying its share of certain costs.
For example, imagine your plan has a $2,000 annual deductible. If you receive services subject to that deductible, you may be responsible for the negotiated cost until you’ve met the applicable $2,000.
Not every service necessarily works this way. Some plans cover certain preventive services before you meet the deductible. For additional definitions and examples, the HealthCare.gov glossary is a helpful resource for understanding common health insurance terminology.
What Is a Copay?
A copay, or copayment, is a fixed amount you pay for a covered health care service.
For example, your plan might require a $30 copay for an office visit or a different copay for a prescription. Copays vary by plan and type of service. Whether a copay applies before or after you meet your deductible also depends on your specific plan.
What Is Coinsurance?
Coinsurance is a percentage of the cost of a covered service that you are responsible for paying, often after meeting your deductible.
Suppose your insurance plan has 20% coinsurance for a covered service and the plan’s allowed amount is $1,000. If the deductible requirements have already been satisfied, your share could be $200 while the insurer pays the remaining covered amount.
How Direct Primary Care Fits Into the Picture
Direct Primary Care, or DPC, is not health insurance and is not a replacement for insurance. Instead, it is a membership model for accessing primary care.
At Integrative Family Medicine, members pay a monthly membership fee for access to primary care rather than having the practice bill insurance for those visits. You can learn more about how Direct Primary Care works at IFM, including the types of primary care included in membership.
Insurance or another strategy for handling medical expenses serves a different purpose, especially for costs associated with hospitalization, surgery, specialist care, or other major medical events. IFM also answers common questions about this distinction on its “What About Insurance?” page.
Some people may also consider health-sharing programs when thinking about how they will handle medical expenses. It’s important to understand that health-sharing programs are not health insurance and do not provide the same protections as ACA-compliant health insurance plans. They are not legally required to pay any particular medical bill, and guidelines, exclusions, sharing limits, and other terms can vary and change over time.
If you’re comparing insurance plans or considering a health-sharing program, review the current terms carefully and consider speaking with a licensed insurance broker or benefits advisor who can provide guidance based on your individual circumstances.
Understanding these differences can make health care terminology—and your own potential costs—a little easier to navigate.
Primary Care, Made More Personal
Health insurance can be complicated. Your relationship with your primary care provider doesn’t have to be.
Integrative Family Medicine offers a Direct Primary Care membership designed around access, time, and an ongoing relationship with your care team. If you are in the Asheville, NC area, contact us today to learn more and get your questions answered.
This article is for educational purposes only and does not constitute financial, legal, or insurance advice. Integrative Family Medicine does not endorse or recommend any specific insurance carrier or health-sharing organization. Please review each program’s official terms directly and consult a licensed insurance professional before deciding.